Twitter lost $103 million last quarter, and is even laying off workers. In the age of Internet company revenues, this should hardly be news. In the age of Social Media, however, it’s definitely worth examining. Particularly in the case of Twitter, as its influence is much larger and more widespread than merely a bunch of athletes and celebrities sharing their most interesting and deep thoughts. And on top of the loss, Twitter quickly followed with an announcement that it will be shutting down Vine, the home of the 6 second video.
Now it’s true that as one gets older, life seems to go by quicker. This is easy math. At 10 years old, a year is 10% of a lifespan, at 50 years old, that year only makes up 2%. Ask a parent…goes by quick. But Twitter? Vine? Here to stay. Oh, that’s what we said about MySpace, if I remember correctly. In fact, we seem to say that about a lot of things these days. Life goes by quick. Even the election will be over soon.
The shutting of Vine is probably less of an impactful event than Twitter losing money and growth rate. But it does go hand in hand with the point I’m getting to. That is, the things we quickly think of as constants are less and less constant or long lived. No wonder we can’t “invest” for the long term anymore. Short term trading is almost the entire life span of some of the most valuable companies. Recently, the long running magazine show 60 Minutes did a story on social media influencers, with a good amount of focus on Vine. And just like that, it’s gone.
As the father of a 14 year old daughter, even I knew Vine was “old news.” Yet, I wouldn’t be surprised if many viewers had never even heard of it, though they’ve all heard of Kim Kardashian. Vine was deemed so world changing among social media apps that Twitter purchased it before Vine even launched. And it really was the king of that ‘genre’, short homemade clips that for some reason people cared about. That was 2010. Some reports gave Vine a top effective value of almost $1 Billion dollars at one point. Not bad, except almost as quickly as it rose, the Vine rocket has crashed back to Earth.
Heck, I haven’t even mentioned the true gorilla in the room yet; Facebook. The advantage I do see in Facebook is the number of small or even home businesses reaching customers via the app. A downside? When I look at the age distribution of Facebook users, it seems to me the skew is moving older.
More grandparents than grandchildren on the site soon? That doesn’t bode well in the social media world.
However, for that same $1 Billion value that Vine reached at its peak, Facebook bought Instagram. Recently, Forbes estimated Instagram’s value at $50 Billion. Nice return. On top of which, it’s a site my 14 year old can’t live without!…until the next one comes along.
So, back to Twitter. While working at Bloomberg, it was impossible to ignore or discount the influence of Twitter on the industry. Social media had finally come of age, as Bloomberg, its competitors, and many other firms looked for ways to filter the immense amount of noise around some actually pertinent tweets. Twitter’s influence on today’s investment community cannot be overestimated, let alone ignored altogether. Stories take on added importance based on retweets, often at the expense of fact. I’m sure again soon we’ll all put our faith in the next new and improved, and then be forced to move on from that one as well.
But this is what we do, and have done as long as the securities industry has been around. We take information, process it, and make decisions based on our conclusions. Previously, the effort was in finding the information. Now the effort, and computing power, is used to actually filter Too Much Information. Just like security prices, there is a large swing of the pendulum in how we ascertain value, probably prior to returning to some sort of mean, or normalcy. The more things change…and all that.
Or is this “The New Normal?” I’m not a big believer in the new normal. I’m a bigger believer in 20:20 hindsight. The world just doesn’t change that much in such short periods. Instead, we just keep searching for the best way to get the best information we can, and before anyone else. Then we look back when we’re wrong and say, “D’oh…It was so obvious.” So the next time there is a new phenomenon, or bandwagon, or whatever else you want to call it, it’s actually just a part of the constant move forward, unfortunately often happening too quick for a glance in the rearview.
As my uncle wisely said almost 15 years ago when my daughter was born, “Don’t blink, you’ll most certainly miss something.”
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